The Primary Benefit of a Futures Exchange Is

question 11

Multiple Choice

The primary benefit of a futures exchange is

• A)always knowing its exact location.
• B)indemnifying counterparties against credit or default risk.
• C)guarantee of trading volume.
• D)intervention on the trader's behalf with government regulators.

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Definitions:

Market Index

A statistical measure that tracks the performance of a specific basket of stocks representing a particular market or sector.

Arbitrage Opportunity

The chance to buy an asset at a low price in one market and simultaneously sell it at a higher price in another market to make a risk-free profit.

Zero-Investment Portfolio

A portfolio strategy that involves creating a position without the need for initial capital by taking both long and short positions in stocks or other securities.

Net Investment

The total amount spent by a company on capital assets, such as plants and machinery, minus depreciation.